Have you been considering purchasing a home recently? Extra Credit Union Real Estate Specialist Dani Yustick has put together a quick list of six reasons why 2018 is the year to purchase. Check it out:
- Renting is EXPENSIVE!
According to Zillow, the average home value in Warren was $125,100 as of December 2017. If you pull up the handy dandy mortgage calculator on Extra Credit Union’s website, using today (January 26, 2018) as a starting rate of 4.25% on a 30-year term, you get a monthly payment of $615.42 (principal and interest). Zillow also reports that the midpoint of rental prices at $1,175 for Warren in December of 2017. This means that the breakeven horizon on purchasing a home in Warren is under a year and a half! The breakeven horizon is the point where owning a home becomes more financially advantageous than renting the same home.
- 20% down is no longer the norm
There are many loan programs out there for our members who have struggled to save a down payment. There are options ranging from a 3-5% down payment. Even some options with NO down payment (Rural & VA loans)! Tax returns and year-end bonuses could potentially be the gateway to homeownership for many people.
- Rates are rising
Interest rates have been on the rise in recent years. Rates simply can’t stay this low forever. Inflation would skyrocket if the cost to borrow money were too low for too long. We’ve seen the Fed (Federal Reserve) raise short term rates FIVE times in the last three years. Mortgage interest rates are still in the low four percent range. Time to take advantage before they tick upwards towards 5%.
- Higher home prices
Zillow reports 6.5% increase in home values for 2017. Rising prices are great for the homeowner (or home seller) but when you are in the market to buy, it can put a damper on what you qualify for. Javier Vivas, director of economic research for Realtor.com, says that he expects home prices to continue to rise, but at a much slower pace of 3% in 2018. While this will help with affordability, it still makes getting preapproved now a great idea.
- Inventory increase
Housingwire predicts housing starts (new home sales) to rise 7% in 2018 compared to 2017. Freddie Mac’s September Outlook Report, which forecasts real estate conditions, predicted as much as a 9% rise this year! Year-to-date home sales were the highest since 2007 last year which is why so many borrowers struggled with lack of inventory in 2017.
- It’s YOUR home
This is the most obvious reason of them all. When you own your home it opens up all sorts of options. With each payment, you gain equity and come closer to full ownership as you pay off the loan. That equity can be used down the line to add to your retirement fund, purchase your next home, update your home (increasing the value even more), or just about anything else your heart desires. Buying a home is an investment in your future and your family.
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